Cypriot banks stand to benefit from a sustainable recovery of property prices on the Meditteranean island, to ratings agency Moody's said on Monday.
Last week some positive news was released by the Central Bank of Cyprus on price data, showing a quarterly increase in the third quarter of 2016, for the first time in 2010.
In a report, Moody's said that the recovering property prices would support the construction industry, incentivise mortgage repayments from strategic defaulters who have the capacity but are unwilling to repay and allow banks to offload real estate taken on their balance sheet through debt-to-asset swaps.
"We expect property prices to broadly stabilise over the coming quarters, and the demand for property to increase gradually from low levels. Real estate sales totalled 7,063 in 2016, versus 21,245 in 2007,” Moody`s said.
An improved real estate market would mostly benefit Bank of Cyprus and the Cooperative Central Bank (CCB), the agency added.